Commercial Mobile Spectrum Outlook
Message from the Minister of Industry

With uncertainty continuing to weigh on the global economy, Canada has an opportunity to lead in creating a world‑class, competitive digital economy that attracts investment, creates jobs and builds a sustainable and prosperous society.

To achieve this vision, we need a modern communications infrastructure that makes efficient use of wireless technology. All wireless services rely on the availability of radio frequency spectrum — a finite resource used by a wide range of sectors across the Canadian economy.

As Minister of Industry, it is my responsibility to ensure that spectrum is managed fairly, and to the maximum benefit of all Canadians.

Mindful of the rapid growth in the use of mobile broadband services, our Government recognizes that sufficient and appropriate spectrum resources must be available to Canada’s wireless providers to ensure that Canadians continue to reap the benefits of technology as we strive to become one of the top digital economies in the world.

With this publication, the Government of Canada is opening a new dialogue with spectrum users, licence holders and other stakeholders. This document makes mention of consultations that will be held before we free up spectrum — we hope you will add your voice on how best to use this precious public resource.

The Honourable Christian Paradis
Minister of Industry and Minister of State (Agriculture)

Executive Summary

The purpose of the Commercial Mobile Spectrum Outlook is to provide stakeholders with an overview of Industry Canada’s overall approach and planned activities to ensure appropriate spectrum resources
are available to meet the demand for commercial mobile services over the next
five years.

The rapid growth of commercial mobile services presents
significant economic and social benefits for Canada. This growth is also
increasing the amount of spectrum required to deliver these services in Canada. Various projections estimate that Canada will require at least 473 MHz and as much
as 820 MHz of spectrum to be allocated to commercial mobile services by
2017. Based on these projections, Industry Canada has set an objective of
allocating a total of 750 MHz of spectrum to commercial mobile services by the
end of 2017.

Taking into account the already-announced auctions, Canada currently has plans in place to have a total of 528 MHz of spectrum available for
commercial mobile services. This means that an additional 222 MHz of
spectrum will have to be allocated to commercial mobile services over the next
five years in order to meet this objective.

Taking into account action being taken by countries around
the globe to identify additional spectrum for mobile, Industry Canada has identified 300-415 MHz of additional spectrum in the following bands that could
potentially be allocated to commercial mobile services by 2017:

AWS 2 10 MHz

AWS 3 50 MHz

AWS 4 40 MHz

WCS 20 MHz

600 MHz 80-120 MHz

3500 MHz 100-175 MHz

Industry Canada will have separate and comprehensive
consultations with industry stakeholders before making any specific decisions
with respect to these bands. It is also recognized that not all of these
spectrum bands will be available by 2017, and that the timing of specific
decisions will be subject to international developments.

The rapid growth in commercial mobile services is also increasing
demand for spectrum to support wireless backhaul services. Overall, Industry Canada believes that the 24 GHz of backhaul spectrum available is sufficient to support the
growing wireless sector until 2017, although efforts will need to be made to find
sufficient spectrum in mid-range frequency bands (11-23 GHz).

Wi-Fi is playing an increasingly important role in the
wireless networks by offloading data traffic from cellular networks onto wired
networks. It is estimated that by 2015, Wi-Fi networks will carry half of all
Internet traffic. As a result, Industry Canada is taking steps to provide
additional spectrum for licence-exempt equipment. Canada recently announced a decision to allow the use of TV white spaces, and is joining other
countries in examining the potential of making additional spectrum available in
the 5 GHz range for use by licence-exempt equipment.

Beyond 2017, mobile data traffic will undoubtedly continue
to grow, likely resulting in additional spectrum requirements. It is conceivable
that at least 1000 MHz of mobile broadband spectrum will be required by the
start of the next decade. As a result, Industry Canada will continue to monitor
developments, both in Canada and abroad, and will update this plan accordingly.

The radio frequency spectrum is a unique, finite resource
that is used in a broad range of applications. It is an integral component of Canada’s telecommunications infrastructure, and provides
access to a range of private, commercial, consumer, defence, national security,
scientific and public safety applications.

The Minister of Industry is responsible for managing the use
of spectrum in Canada, in accordance with the provisions of the Radiocommunication Act.Footnote 1 As set out in the 2007 Spectrum Policy Framework for Canada,Footnote 2 Canada’s overall objective is to maximize the economic and social benefits
that Canadians derive from spectrum use. Industry Canada is responsible for the
allocation and assignment of spectrum resources to various services and applications,
as well as the licensing of specific frequencies through radio or spectrum licences.

One of the principal challenges in managing spectrum is the
fact that it is a limited resource that must support a continually growing and
increasingly sophisticated range of applications. As a result, Industry Canada must continually monitor trends in spectrum usage and re-evaluate current spectrum
allocations and assignments.

The biggest challenge for spectrum managers around the globe
today is the rapid growth in demand for commercial mobile services. Commercial
mobile services provide the general public with telephony, and increasingly, data
and video applications. Growing consumer demand for greater geographic
coverage, faster data rates and more sophisticated applications is driving a
rapid increase in the spectrum requirements for commercial mobile services, as
well as affecting the spectrum requirements for backhaul and for licence-exempt
devices that use Wi-Fi technology for Internet access.

The purpose of the Commercial Mobile Spectrum Outlook is to provide stakeholders with an overview of Industry Canada’s overall approach and planned activities in order to ensure additional spectrum
resources are available to help meet demand for commercial mobile services over
the next five years. Part 2 provides an overview of Industry Canada’s policy approach, based on the 2007 Spectrum Policy Framework for Canada. Part 3 provides a review of expected future demand for spectrum to support
commercial mobile services. Part 4 provides an assessment of potential spectrum
bands that could be allocated and assigned to commercial mobile services and
associated services over the next five years.

The Outlook is intended to reflect Industry Canada’s current direction and efforts to provide spectrum for commercial mobile services. As
such, it may be updated from time to time in order to reflect changing
priorities, significant technological changes or international developments. The Outlook will be updated following the auction of spectrum in the 700 MHz
and 2500 MHz bands as well as after the 2015 World Radiocommunication
Conference is held.

The observations and conclusions expressed in the Outlook are based on the current situation in Canada and abroad, and are therefore subject
to change. Stakeholders are welcome to provide feedback and comment on an
ongoing basis; however, the Outlook is not intended to be a substitute
for separate, comprehensive consultations with stakeholders on specific
spectrum management issues. For a complete list of recent and ongoing public consultations,
please refer to the Industry Canada website.Footnote 3

Industry Canada maintains a number of official policy
documents that provide guidance on the administration and implementation of the Radiocommunication Act.Footnote 4 Chief among these is the 2007 Spectrum Policy Framework for Canada (SPFC), which articulates the overall objective and underlying principles that
the Minister of Industry relies upon in exercising his authorities under the Act.Footnote 5 The overall objective of the spectrum management program is "to maximize the
economic and social benefits that Canadians derive from the use of the radio
frequency spectrum resource." The Framework also sets out the following
enabling guidelines for achieving this policy objective and for directing
Industry Canada’s spectrum management activities:

Market forces should be relied upon to the maximum extent feasible.

Notwithstanding (a), spectrum should be made available for a range of
services that are in the public interest.

Spectrum should be made available to support Canadian sovereignty,
security and public safety needs.

Regulatory measures, where required, should be minimally intrusive,
efficient and effective.

Regulation should be open, transparent and reasoned, and developed
through public consultation, where appropriate.

Spectrum management practices, including licensing methods, should
minimize administrative burden and be responsive to changing technology and
marketplace demands.

Canada, like most other countries, participates in the
global coordination and harmonization of spectrum management through the
International Telecommunication Union (ITU). The Radiocommunication Sector of
the ITU (ITU-R) serves to facilitate the equitable, efficient and economic use
of spectrum among all radiocommunication services. The ITU-R maintains the
international Radio Regulations, which define the allocation of spectrum
bands to various types of services on the basis of the International Table
of Frequency Allocations. Additionally, the ITU-R specifies technical
standards to be observed by radio stations, as well as procedures for
international coordination, in order to ensure technical compatibility of radio
systems between countries. The Radio Regulationsare reviewed and
amended at the ITU’s World Radiocommunication Conferences (WRCs), which are
typically held every three to four years. The last WRC was held in 2012, and
the next conference is scheduled for 2015.

Canada strongly supports the global harmonization and
coordination of radio frequency allocations and technical standards through the
ITU. Global harmonization and coordination contributes to greater certainty for
radio equipment manufacturers, who can design and manufacture devices to meet
the requirements of global-scale markets, rather than multiple devices to meet
the divergent requirements of different jurisdictions. Larger markets lead to larger
technology ecosystems, which result in greater economies of scale and more
affordable equipment. The Canadian market alone is simply not large enough to attract
manufacturers to build equipment for unique Canadian band plans. Consequently,
Industry Canada will continue to use the ITU to promote international
harmonization, particularly as spectrum managers from around the world work to
identify spectrum that could be reallocated to meet the requirements of
commercial mobile services at the next WRC in 2015.

Given Canada’s proximity to the United States, spectrum
coordination within North America is most critical. Canada has entered into a
number of treaties and arrangements with the United States to allow certain radiocommunication
equipment that has been duly authorized in one country to operate in the other,
thereby avoiding cross-border interference. Among other things, these
arrangements for the Coordination and Use of Radio FrequenciesFootnote 6 specify:

Frequency bands for which new radio systems must be coordinated
between the two countries;

Geographic areas (near the border) where coordination must occur
for certain frequencies;

Notification and consultation procedures that must be followed
between regulatory agencies for the two countries concerning new frequency
assignments; and

Common specifications for use of radio systems in various
frequency bands, including antenna height limits, maximum radiated power, etc.

For these reasons, it is critical that Industry Canada
monitor and influence, to the extent possible, the spectrum management
decisions in other major markets, particularly the United States.

The Canadian Table of Frequency Allocations establishes
the frequency allocations available for radio services in Canada for frequencies between 9 kHz and 275 GHz. For the purpose of spectrum allocations, radio
services are identified as primary and secondary services. Primary services
have priority use of the frequencies allocated to them and have a right to
claim protection from harmful interferences originating from other co-primary services
through frequency coordination, as well as from secondary services at all times.
Secondary services may also be permitted to use a particular band, but are
prohibited from causing harmful interference to primary services.

The Canadian Table of Frequency Allocations is
generally, though not entirely, consistent with the International Table of
Frequency Allocations maintained by the ITU. Canada is committed to
harmonizing spectrum use with international allocations and standards, except
where Canadian interests warrant a different determination. In some cases, the
Canadian Table reflects only a subset of services allocated in the
International Table, reflecting the most desirable services in Canada.

In June 2011, Industry Canada published Radio Spectrum
Inventory: A 2010 Snapshot — Canada,Footnote 7 which provides an overview of current spectrum allocations and assignments, within
the range of 52 MHz to 38 GHz, among 12 different groups of services and
applications: commercial mobile, fixed systems (backhaul and fixed wireless
access), land mobile, amateur service, public safety, broadcasting, satellite
services, space science services, aeronautical services and applications,
marine mobile service, radiodetermination and licence-exempt devices. The
report provides historical trends in assigned spectrum, an analysis of current
spectrum usage and a comparison with spectrum use in the United States. Furthermore, the report provides a basis for ongoing evaluation of current
spectrum allocations as the department aims to balance the spectrum needs of
existing services with those of new or growing services.

Spectrum is a limited resource, and the "usable" spectrum range
(given current technologies) is completely allocated to existing services. As a
result, and within the policy context set-out above, Canada must rely on a
combination of demand-side and supply-side measures in order to meet the
spectrum needs of new or growing services.

On the demand-side, licensees must use existing spectrum allocations
more efficiently in order to provide improved service without requiring
additional spectrum resources. Greater spectrum use efficiency can be achieved
by optimizing infrastructure deployment (for example, increasing network
density in order to increase frequency reuse) or by adopting innovative
technologies (such as 4G wireless mobile broadband technologies).

Industry Canada has an important role to play in
facilitating spectrum use efficiency, notably through the identification of
contiguous and larger bandwidth allocations, through the market-based pricing
of spectrum resources, through supporting innovative research and development into
new techniques to improve spectrum efficiency and by supporting competition in
the wireless sector. However, primary responsibility to improve spectrum use
efficiency rests with licensees themselves, especially in their ability to make
appropriate and continual investments in network infrastructure and to utilize new
technologies that improve the efficiency of spectrum use.

Canadian commercial mobile service providers have improved
spectrum use efficiency by investing over $13 billion in their wireless
networks between 2003 and 2010 (Figure 1). This amount does not include the
$4.25 billion spent to acquire new commercial mobile spectrum in the 2008 AWS
auction, nor investments that were made to expand wireline infrastructure. Instead,
these investments have gone toward expanding network coverage and density (for
example, by adding additional cell sites) as well as toward upgrading
technology and network applications (for example, the deployment of 4G
technologies). As well, major gains in spectral efficiency have been achieved
as providers move from older technologies, such as Global System for Mobile
Communications (GSM), to newer ones, such as High Speed Packet Access (HSPA)
and Long Term Evolution (LTE) (Table 1).

In order to meet future demands for spectrum, key
determinants include continued capital investment as well as the development of
additional technological and business innovations designed to significantly
increase spectrum use efficiency. It is therefore critical that Canada’s wireless providers be encouraged to actively pursue innovations such as dynamic
spectrum sharing and cognitive radio, small cell networks, smart antennas and
others that have the potential to improve spectrum use efficiency.

Supply-side Management

While the private sector must lead the way in making better,
more efficient use of spectrum, Industry Canada recognizes that efficiency
improvements alone cannot meet the growing demand for commercial mobile services,
and that in order to meet the objective of the SPFC, it has an obligation to manage the supply of
spectrum by reallocating limited spectrum resources between radio services. Such
reallocation decisions need to consider not only the requirements of commercial
mobile services, but also those of associated services, such as fixed systems that
provide backhaul capacity or licence-exempt devices, which allow for the
offloading of traffic from commercial mobile networks.

When determining the need for spectrum reallocations,
Industry Canada will be guided by the SPFC and will endeavour to make
decisions in a timely and transparent manner after consultation with
stakeholders. In addition to considering stakeholders’ views, Industry Canada’s approach to determine whether and how to reallocate spectrum is based on two main
considerations. The first consideration is the expected additional demand for
spectrum presented by the new or growing service, taking into account the
potential to increase spectrum use efficiency through the application of best
available technologies. The second consideration is an assessment of candidate
bands, based on a combination of the following three factors: (1) the current
use of the band in Canada; (2) projected technological developments and the
expected availability of equipment able to use the reallocated bands in order to
deliver the new or growing service (often referred to as a "technology
ecosystem"); and (3) international trends and whether the new use of the band
is compatible with Canada’s international obligations (also known as international
frequency coordination).

The next part of the Outlook (Part 3, "Demand for
Spectrum to Support Commercial Mobile Services") provides a summary of Industry
Canada’s current analysis of the future expected demand for spectrum in the
mobile communications category, given existing trends in network investments
and technological improvements to improve efficiency. Part 3 also includes a
summary of the impacts that growing commercial mobile services are expected to
have on the spectrum requirements for backhaul services and for licence-exempt
devices, which are used to offload mobile traffic onto wired networks.

Based on this analysis of the expected future demand for
spectrum from these services and applications, Part 4 of the Outlook ("Additional
Spectrum to Support Commercial Mobile Services") details Industry Canada’s current assessment of candidate bands that could be reallocated to meet future
requirements.